Easing multiple bank transfers
Handling, receiving and disbursing payments are time consuming for most businesses. And to ease this process, Cashfree, a B2B (business-to-business) fintech start-up, has devised a solution. The Bengaluru-based firm claims to be the country’s first payments gateway that automates inbound and outbound bank transfers. This replaces the slow, error-prone alternative of uploading excel files for bulk payments or manually reconciling payments received via bank transfers.
By simplifying bank transfers, it hopes to drive banking adoption and ease of business.
Cashfree says payments that take onethree days happen instantly through their platform, independent of Reserve Bank of India-mandated banking hours. Bootstrapped for two years, the payments platform has received $120,000 in seed funding from Silicon Valleybased start-up accelerator Y Combinator.
“Cashfree is being used for crowdfunding campaign settlements, supply-chain collections by distributors, marketplace vendor settlements, payroll for on-demand economy workers, loan disbursals or repayments by lenders, modern ERP and accounting tools for invoice payments, and for instant refunds at payment gateways. These used to take 5-7 days earlier," says Akash Sinha, who co-founded the company with Reeju Datta in September 2015.
About 3 billion bank transfers happen in India annually. This is growing 30 per cent annually, even with the existing manual processes. We estimate there would be a $2-billion opportunity in the next five years, Sinha says.
“Payments innovation will play a major role in shaping the Indian economy. Cashfree has identified payment problems that existing payment companies haven't been solving. We believe they (Cashfree) have the right team to execute it," said Michael Seibel, chief executive officer and partner, Y Combinator.
The start-up claims it processes more than ~50 crore of payments every month and has 1,100 merchants on its platform. It has a target to process ~200 crore by the end of this month. “We are looking to improve the product offering, which will allow us to grow to around ~400 crore of monthly transaction volume and 20,000 customers within 12 months. Fintech and marketplaces are our primary targets,” he adds.
Cashfree achieved break even in March and charges a fee per transaction as its revenue.
On challenges, Sinha says: “As we are growing almost 100 per cent every month, all our systems — tech, operations, marketing — have to evolve to handle the scale. This is essential to maintain the kind of quality we want to be known for." We want to enable foreign merchants to accept payments from Indian customers at a low cost and disburse payments to any Indian vendor instantly, he adds.
The company says, currently there is no competition for them in the market.